Business report

MSc MANAGEMENT (INTERNATIONAL BUSINESS) 2013/2014
Project supervisor - Des Laffey
Growing Business Opportunities in Nigeria: A Case Study Of How Small And
Medium Enterprises Can Attract FDI in the Nigeria Agriculture Sector
CB951 – BUSINESS REPORT
September 2014

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Business report MSc suite
Des Laffey/Dr. Ben Lowe
Module Code: CB951
Seminar Group:
Surname: JOHNSON
First Name: EMMANUEL OLUWASEUN
Programme of Study: MANAGEMENT (INTERNATIONAL BUSINESS)
MSc
Login: oei2
Student Number: 13901145
Declaration: I confirm the work submitted is entirely my own and have fully
referenced my sources as appropriate. I am aware of the penalties for
plagiarism.
Date: 19/09/2014
Official Stamp

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LIST OF CONTENTS
List of figures……………………………...………………………………….........................5
Acknowledgements………………………………………………........………………...…....6
Executive summary………………………………………………........…………...................7
CHAPTER 1 INTRODUCTION
1.1 Objectives………………………………………………………......................…….……8
1.2 Problem statement……………………………………………………...........................…9
1.3 Research Question………....................……………………………………………..…....14
1.4 Specific Questions…….................…………………………………...……………..……14
1.5 Justification……………………………………....................………………………..…...14
CHAPTER 2 LITERATURE REVIEW
2.1 Nigeria as an Investment Hub in Africa.....................................................................................17
2.2 Oil as the Cornerstone of Nigeria’s Economy...........................................................................18
2.3 Agriculture and the Nigerian Economy: Unlocking the Potentials..........................................21
2.4 Investment potentials of agriculture in Nigeria...........................................................................23
2.5 FDI and Economic Growth.........................................................................................................25
2.6 FDI and the Nigerian economy...................................................................................................28
2.7 Investment Constraints in Nigeria and Determinants of FDI Inflow......................................29
CHAPTER 3 METHODOLOGY
3.1 Data Collection Method and Analysis...........................................................................................31
CHAPTER 4 ANALYSIS
4.1 Designation of Participants..............................................................................................................33
4.2 Assessment of Investment Prospects of Agriculture in Nigeria by Participants...................36
4.3 Potential investment opportunity-areas.........................................................................................37
4.4 Investment Constraints in the Agriculture Sector in Nigeria....................................................38
4.5 Policy Recommendation for Government and Investors...........................................................38
4.6 Realistic Survival Strategies of some Firms in the Agriculture Sector.....................................39

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4.7 Realistic Survival Strategies of some Firms in the Agriculture Sector……………….……39
CHAPTER 5 DISCUSSION OF FINDINGS
5.1 What and where are the Key Investment Opportunities in the Agriculture Sector of the
Nigerian Economy?...............................................................................................................................40
5.2 What are the Challenges to Investment in the Agriculture Sector in Nigeria?......................40
5.3 What Realistic Strategies are available for overcoming the numerous Investment Constraints
in the Agriculture Sector?.....................................................................................................................42
CHAPTER 6 CONCLUSION
6.1 Conclusion........................................................................................................................................43
6.2 Limitations………………………………………………………………………………..43
6.3 Recommendation..............................................................................................................................44
6.4 Policy recommendation to prospective MNEs............................................................................44
6.5 Policy recommendations for government......................................................................................44
Reference List......................................................................................................................................45-52
Appendices..........................................................................................................................................53-54

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List of figures
TABLE 1: FDI Inflow by Region, 2010-2012 (percentage share in world FDI flows).............11
TABLE 2: Inward FDI rates of return, 2006–2011 (%)................................................................12
Table 3: Percentage Composition of FDI in Nigeria by Sectors, 1980-2009.............................15
Table 4: Twenty Most Oil Dependent Countries, 2000 (Fuel Exports as a Percentage of
GDP)......................................................................................................................................................19
Table 5: Twenty Most Oil-Dependent Countries, 2000 (Fuel Exports as a Percentage of
GDP)......................................................................................................................................................20
Table 6: Respondent Details…………………………………………………………………..34
Appendix 1 Letter of request for research access............................................................................54
Appendix 2 Interview plan......................................................................................................................55

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ACKNOWLEDGEMENTS
First and foremost, I would like to take this opportunity thank God for everything; I would
also like to thank all the people that contributed toward the completion and submission of this
project. My deepest thank to my cousin, (Mr. Thomas Ogungbangbe) for his brotherly love,
advice, proof reading and financial support throughout my studies in the United Kingdom,
and giving me the opportunity to rewrite my history. Most importantly, I owe a great many
thanks to my project supervisor (Des Laffey) who helped, guided and supported me not just
throughout this project but also my MSc programme at the University of Kent.
Secondly, my deep sense of gratitude to my family, friends, and well-wishers, for their
support throughout this programme. I also express my thanks to a special friend, my fiancée
(Dr. Fisayo Olaore) for extending her support.
Lastly, I express my thanks to the entire staff from Kent business school for their helpful
insight throughout my Master’s degree programme and all of the interview participants from
the Nigerian agriculture sector, without whom this project would have been a distant reality.
Once again, I say big thanks to Des Laffey for guiding me through this report.

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Executive summary
Nigeria used to be a powerhouse in the agriculture sector; regrettably, the country now
remains a net importer of agricultural products like palm oil, which Nigeria currently remains
the third largest producer in the world after Indonesia and Malaysia (Ayodele, 2010 cited
from New York Times). Evidently, Nigeria government has failed to ‘diversify the economy
away from the capital-intensive oil sector’, ignoring sectors such as agriculture, which used
to be seen as the backbone of the country’s economy (Ayodele, 2010), thus the growth of
other basic infrastructure has been extremely affected (Nimad, 2013).
Consequently, most Nigerians have continued to criticize its policy makers for their over
dependent on the oil sector, with the country’s major source of revenue coming from oil
while the agriculture sector is being overlooked (Clottey, 2014 cited from Voice of America;
Euromonitor. 2014, Adetayo, 2014). Hence, there is a need to diversify Nigeria’s economy,
by transforming the agriculture sector and maximize its potential as a foreign direct
investment (FDI) destination of choice in Africa and the global market place.
As a result, this business report will investigate and explore how multinationals can tap from
the investment opportunities the Nigeria agriculture sector presents while analyze critically
the investment constraints in the agriculture sector, and the market itself. In sum, the primary
aim of this project is to showcase Nigeria’s agriculture sector as an investment opportunity
market.
The literature reviewed the Nigeria’s FDI and economic growth , the opportunities and
constraints in the oil and agriculture sector respectively, aiming mainly on the issue of policy
maker’s over dependent on the oil sector whereas the agriculture is being disregarded.
Furthermore, collecting data for field analysis, the researcher collected primary data using the
interviewing method and review of documents from relevant sources. Based on open-ended
questions, interviews will be semi-structured in nature. Interview participants will be
purposively selected to meet the objectives of this report. Among those interviewed are
government officials, farm managers; farmers; and researchers from small and medium
enterprises in the agricultural sector. Data was collected and critically analyzed through a
critical discussion of field findings, and result indicated that all participants interviewed via
phone and a face to face interview gave a positive assessment of agriculture as a potential
investment market in Nigeria.
Accordingly, recommendations were made for both Nigeria policymakers and MNEs to help
guide business decisions on investment opportunities in Nigeria agribusiness. Likewise, this
report successfully revealed varied, valuable and knowledgeable insides on how Nigeria
MNEs can efficaciously integrate the dynamic and complex Nigerian agribusiness, which the
reader would find interesting, while this work also helps the author understand how Nigeria
agriculture sector is interconnected to all parts of Nigerian economies, the awareness of
investment constraints and opportunities that beset the market, and the importance of
agribusiness to its economy, and as well as the global market.

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CHAPTER ONE
INTRODUCTION
1. Introduction
The objective of the study is to present Nigeria as an investment hub based on a case analysis
of investment opportunities and constraints in the agriculture sector of the Nigerian economy.
Although Nigeria is presented as a country with abundant investment opportunities with huge
market size and the largest economy in the sub-saharan Africa with a GDP growth of 7.3
percent and total of $523 billion (Euromonitor, 2014). The study also acknowledges that
there are numerous investment constraints such as high level of corruption, poor
infrastructure, poverty, Boko Haram, (militant insurgencies by the so called extremist group)
which in return has crippled the Nigeria’s socio-economic development (Euromonitor, 2014).
In fact, as at 2013, research indicates only 10 percent of rural population and 40 percent of
the urban population gained access to electricity in Nigeria (Euromonitor, 2014). The
question is how can Nigeria actualize and maximize its potential as a foreign direct
investment (FDI) destination of choice in Africa and the world as a whole. Accordingly, this
research explores how prospective multinational enterprises (MNEs) can overcome
constraints to investment to take advantage of available investment opportunities in the
agriculture sector and in the Nigerian economy as a whole.
With up to 70% of the population engaged directly or indirectly in the agriculture sector (see
FAO, 2012), Nigeria can be rightly described as an agro-based economy. In view of this, the
investment opportunities are there for MNEs to grab in the agriculture sector of the Nigerian
economy. The question however is how firms can overcome the numerous constraints to
investment to take advantage of available opportunities. Answering this question is not only
important for the agriculture sector, it is equally important for MNEs seeking to invest in this
sector of the Nigerian economy. A critical analysis of this core research question will help
MNEs to make informed position on when and when not to invest in foreign markets.
1.1 Objective
The core objective of the study is to present Nigeria an investment hub through a case
analysis of the agriculture sector of the economy. To this end, the study pursues the following
specific objectives to:
- highlight and critically analyze investment opportunities in the agriculture sector;

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- identify and examine constraints to investment in the agriculture sector; and
- explore realistic ways of overcoming the numerous investment constraints in the
sector.
1.2 Problem Statement
The problematic of this study is set against the background of marginalization of African
countries in global FDI flow and the over-reliance of the Nigerian economy on oil for foreign
exchange earnings. In addition, the study explores realistic ways of overcoming investment
constraints to taking advantage of potential investment opportunities in the agriculture sector
of the Nigerian economy.
Fundamentally, this research highlights Nigeria as an investment opportunity market. It also
critically analyses the benefits and challenges first movers are presently experiencing in the
Nigerian investment clime. The study aims at providing recommendations that would act as
useful guide for existing and prospective MNEs in the dynamic and challenging Nigerian
business environment.
The impending and gradual saturation of the Asian markets creates the need for alternative
markets for foreign direct investment (FDI). This when set against the marginalization of
Africa in global FDI inflow despite the high rate of return on investment that the African
market has been noted to manifest (see Adam, 2009), draws critical attention to issues of
opportunities and constraints to investment in Africa as a whole. In this context, the potentials
of Nigeria as a prospective investment hub has been variously acknowledged (see USAID,
2014; The Economist, 2014). In spite of this however, literature documents numerous
constraints and challenges to FDI attraction that must be overcome if Nigeria is to actualize
its potential as an alternative albeit important market for FDI in Africa and indeed the world
(see AllAfrica, 2012; BBC, 2014; McKern, et al, 2010; Trading Economics, 2013; Africa
Economic Outlook, 2014).
On the marginalization of African countries and by extension Nigeria in global FDI flow,
Aayanwu (2012) stressed the importance of FDI to socioeconomic development. In this
context, FDI is identified as a key element of the globalization of the world economy capable
of driving employment, technological progress, productivity improvements, and ultimately

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economic growth (Anyanwu, 2012: 425, Dunning, 2001). Citing Smith (1997) and Quazi
(2007), Anyanwu posits that FDI plays the critical roles of filling the development, foreign
exchange, investment, and tax revenue gaps in developing countries. Anyanwu further
highlights how FDI can play an important role in Africa’s development efforts, noting that
FDI can supplement domestic savings and help in generating employment and growth. In
addition, it is observed that FDI could pave the way for the integration of Africa into the
global economy and also lead to transfer of modern technologies, enhancing efficiency and
raising skills of local manpower (Anyanwu, 2012).
It is therefore instructive to note that, as part of global trend, there has been a steady increase
in the flow of FDI to Africa over the last decades (see Asiedu, 2002). In this regard, Adam
(2009: 179) notes that the total world FDI inflows, which stood at $59 billion in 1982, grew
dramatically to $648 billion in 2004 and reached its peak of $1,833 billion in 2007. More so
in Africa, FDI inflows amounted to $36 billion in 2006, which was 20% higher than the
previous record of $30 billion in 2005 and twice the 2004 value of $18 billion and rose to a
historic value of $53 billion in 2007 (see Adam, 2009: 179). Despite this surge in FDI to
Africa, attributed largely to investment in extractive industries, the take is that FDI flow to
the region is still very marginal given it represents less than 3% of global FDI flow (Adam,
2009, see also Ogunkola and Afeikhena, 2006). More so, in real value, Africa’s share of
global FDI flow fell from 3.1% to 2.7% and 2.9% in 2005 and 2007 respectively (Adam,
2009).
A 2013 UNCTAD world investment report shows that developing countries take the lead in
global FDI inflow for the first time ever; attracting 52% of such flows in 2012 against 42%
for developed economies (see Table 1). The critical question here is how well Africa and
indeed Nigeria performs in the upsurge in FDI flow to developing economies in the specified
period. Although 2012 marks a watershed in global FDI flow trend as developing economies
for the first time ever surpass developed economies in FDI inflow (52% against 42%), Africa
remains on the margin of this surge in FDI to developing economies relative to their Asian
and Latin American counterparts (see UNCTAD, 2013). Table 1 shows that at 3.7% of global
FDI inflow in 2012 Africa compares less favorably with Asia (30.1%) and Latin America
(18.1%). Asia accounts for 58% of total FDI inflow to developing economies in 2012 (see
UNCTAD, 2013: 2).

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TABLE 1: FDI Inflow by Region, 2010-2012 (percentage share in world FDI flows)
Source: UNCTAD 2013 World Investment Report
Ajayi (2006a: 1) notes the marginalization of Africa in the global FDI flow, positing that in
comparison with all other developing regions, Africa has remained aid dependent, with FDI
lagging behind official development assistance (ODA). This marginalization becomes even
clearer when it is considered that between 1970 and 2003, FDI accounted for just one fifth of
all capital flows to Africa (ibid). Ajayi (2006b: 13) further observes that FDI to Africa has
been dominated by inflow to the extractive industry, oil in particular. Figures made available
in UNCTAD (2003: 9), cited in Ajayi (2006b), show that FDI in the oil industry remained
dominant in 2002, with Angola, Algeria, Chad, Nigeria and Tunisia accounting for more than
half of the 2002 inflows. Contrary to global trend in the structure of FDI towards the service
sector, the extractive industry where competitive advantages outweigh the continent’s
negative factors continues to dominate FDI inflow to Africa (Ayaji, 2006: 14; see also Asiedu
2006 on the role of the extractive industry in attracting FDI to Africa).
Gleaning from UNCTAD (2001), Ayanwale (2007: 9) sums up the marginalization of Africa
in the surge in global FDI flow. Accordingly, Ayanwale notes that while FDI in the world
rose from US$57 billion in 1982 to US$K271 billion in 2000, only a few countries have been
successful in attracting significant FDI flows. In this context, Ayanwale observes that Africa
as a whole and sub-Saharan Africa (SSA) in particular has not particularly benefited from the
FDI boom. Specifically, Ayanwale (2007: 9) argues that “for most of the time since 1970,
FDI inflows into Africa have increased only modestly, from an annual average of about
US$1.9 billion in 1983-87 to US$3.1 billion in 1998-1992 and US$4.6 billion in 1991-1997”
(Ayanwale, 2007: 9).

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In concrete terms, as noted in Anyanwu (2012: 426), Africa has never been a major recipient
of FDI flows and so lags behind other regions of the world. Comparing Africa’s share of
global FDI flow over extended periods with Asia’s, Anyanwu observes that the regions share
of global FDI inflows was 2.6 percent in the period 1980-89; 1.9 percent in the period 1990-
1999; and 3.2 percent in the period 2000-2009. It is however instructive to note that during
the same periods, the Asian region received FDI inflows 14.2 percent, 19.1 percent, and 19.1
percent of total global inflows, respectively (Anyanwu, 2012: 426).
The marginal and decreasing share of Africa’s global FDI inflow notwithstanding, the region
remains a very attractive investment hub. Accordingly, Adam (2009: 179) notes that despite
decreasing trend being experienced in FDI flow to Africa, the rate of return on FDI into the
region has been rising since 2000 and stood at 12% in 2007, which is the highest in the
developing world (ibid: 180). The global rate of return on FDI climbed to 7.2% in 2011 from
6.8% in 2010 (see Table 2). The table also shows that the rate of return on FDI for developed
economies stood at 4.8%, while that of developing economies was estimated at 8.4% in 2011.
By implication, rate of return on FDI for developing economies is higher than for developed
economies within the six-year period covered by the table (see also UNCTAD, 2013: 31). It
is however instructive to note that with the exemption of transition economies, Africa has the
highest rate of return at 9.3% in 2011. It is therefore worrying that the Africa’s share of
global FDI has continued to fall despite the high return rate on FDI that the region has
displayed since 2000.
TABLE 2: Inward FDI rates of return, 2006–2011 (%)
Source: UNCTAD 2013 World Investment Report

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A critical interrogation of the downward trend in FDI inflow to Africa therefore becomes
imperative. In this sense, one would want to examine not just the region’s prospects in
attracting FDI, but also more importantly the constraints and challenges to investment.
Against this background of marginalization of Africa in global FDI inflow, this study focuses
on Nigeria, which has been identified recently as one of the biggest recipient of FDI to sub-
Saharan Africa (see thenigerianvoice.com, June 2013). Specifically, Adam (2009) submits
that it accounts for 16% of the region’s stock. Interestingly, based on data available from
UNCTAD (2013: 33), Nigeria is in the league of top 20 economies with highest inward FDI
rates of return as at 2011, the latest year for which data are almost complete for most
countries. This high return rate on FDI in developing economies, particularly in Africa and
transition economies, has been attributed to investment activities in the extractive and
processing industries (ibid).
Further drawing from the marginalization of Africa in the recent surge in global FDI flow,
this study argues that the saturation of the Asian market will give birth to a need for
multinationals to look for new markets with potentials. In this context, Nigeria remains a
promising market and one of the fastest growing economies with vigorous economic growth
in the past 7 years (USAID, 2014). In fact, the Nigerian GDP economic growth will soon
surpass that of South Africa’s (The Economist, 2014). While the market potentials of Nigeria
cannot be overlooked, it is however instructive to note that Nigeria remains a highly corrupt
and complex market; research presented by the World Bank shows that 80 per cent of
organizations in Nigeria bribes government bureaucrats (AllAfrica, 2012). This problematic
context notwithstanding, Nigeria remains a promising market and one of the fastest growing
economies with vigorous economic growth in the past 7 years (USAID, 2014).
Despite the numerous investment constraints that besets the Nigerian market, it has been
included as one of the emerging giant markets; the ‘MINT’ countries (Mexico, Indonesia,
Nigeria and Turkey). The term ‘MINT’ developed by an Economist, Jim O’Neill who
described these four countries with distinct market potentials such as ‘inner’ demographics,
huge population size and future markets to invest (BBC, 2014). In term of market size,
Nigeria’s population reached almost 170 million people in 2012, making the country the
leading populated area in Africa (McKern, et al, 2010; Trading Economics, 2013). In terms
of locational advantages, Nigeria is extremely rich in natural resources with almost 34
different minerals, although oil remains the country’s major source of income (Africa
Economic Outlook, 2014).

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1.3 Research Question
How small and medium scale enterprise in the agriculture sector overcome challenges in the
complex Nigerian business clime while taking advantage of available investment
opportunities.
1.4 Specific questions
 What and where are the key investment opportunities in the agriculture sector of the
Nigerian economy?
 What are the challenges to investment in the agriculture sector in Nigeria?
 What can be done to tackle these numerous investment constraints in the agriculture
sector, and what realistic strategies are available?
1.5 Justification
The study is a deviation from traditional focus on the oil sector of the Nigerian economy to a
focus on the agriculture sector, which is often overlooked by investors due to the complexity
and volatility of the sector. Evidently, Nigerian government and other stakeholders’ focus
have been on the oil and gas sector in the past years. There is a need to bear in mind that
before the discovery of oil between 1960 and 1970s; the country’s major source of wealth
was coming from the non-oil sector (Balogun, 2012 cited from Punch Nigeria). As at 1973,
the agriculture sector accounted for more than 40 percent of the country’s GDP, which later
declined ten years later to 1.9 percent, with export dropping to 7.9 percent (Metz, 1991). As a
clear indication of the negligence the agriculture sector has endure; it has been revealed that
between 1980 and 2009, while the extractive sector in general averaged 26.2% of total FDI
(Table 2; also Imoudu 2012: 125), and the oil sector in particular accounting for over 60% of
total FDI inflow (see Imoudu, 2012: 123; Ayanwale, 2007: 2), the agriculture sector has
averaged 1.4% of total FDI inflow within this same period (Table 2; also Imoudu 2012: 125)
Despite this drastic shift from non-oil to oil sector, Nigeria remains a highly blessed country
with fertile land and cash crop products (Ade, 2007). The agriculture sector has continued to
contribute to economic growth, creating jobs for 70 percent of Nigerian population and
accounting for 30% of GDP (Balogun, 2012 cited from Punch Nigeria; Ade, 2007). In fact, in
a report presented by the managing director of a private limited exporting company (Mr.
Obumneme Umeokafor of Jocarol Nigeria limited), He convincingly argued that Nigeria

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stands to benefit more from the non-oil export trade buts insist the Nigerian government has
to generate more ‘enabling environment’ (Balogun, 2012).
In the work of Ajaero et al (2012:286), Smith (2009) described Agriculture as the ‘most vital
economic activities’ of we human being and remains the foundation of distributing food to
the entire world. In sum, this sector remains a vital branch of the Nigerian economy but the
FDI inflow remains extremely low compare to that of the oil sector. They (Ajaero et al, 2012)
went further and emphasized that if the country can shift focus back to the agriculture sector,
the main country’s problem which is insecurity could be tackled by creating more jobs
(Ajaero et al, 2012, p.286). Nigerian president (Goodluck Jonathan) recently seek the support
of US president, Barack Obama’s administration in a meeting, encouraging Obama’s
administration to invest in other non-oil sectors, especially the agriculture sector; pointing out
that, despite Nigeria being a major global oil supplier, the country still possesses “untapped
solid minerals and unexploited fertile lands of agriculture” (Adetayo, 2014, cited from Punch,
Nigeria).
Table 3: Percentage Composition of FDI in Nigeria by Sectors, 1980-2009
Source: CBN Statistical Bulletin (2009) and Imoudu (2012)

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In effect, the study will provide insights on investment prospects and constraints in the
complex Nigerian market. Also, the marginalization of Africa and by extension Nigeria in the
global FDI inflow despite the high return on investment that the region has been noted to
manifest calls for critical interrogation of both opportunities for and constraints to investment
in the continent as a whole and Nigeria in particular. The output of this research will lend
itself to both academics and policy alike.

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CHAPTER TWO
LITERATURE REVIEW
The chapter examines Nigeria as an investment hub through an extensive and critical review
of relevant literature obtained from sources that include journals from the University of Kent
database and newspaper articles, statistical bulletin of international and governmental
organizations, chapters in books, conference proceedings and the internet. Attention is drawn
to both investment opportunities and constraints in the oil and agriculture sectors of the
Nigerian economy in particular. Clearly brought to the fore in the review is the issue of over-
reliance of the Nigerian economy on oil as a source of export earnings, and how it results to
the negligence of the agriculture sector.
2.1 Nigeria as an Investment Hub in Africa
Nigeria as a country, given her natural resource base and large market size, qualifies to be a
major recipient of FDI in Africa and indeed is one of the top three leading African countries
that consistently received FDI in the past decade (Ayanwale, 2007: 2). According to Onakoya
(2012: 66) citing Schoeman, Robinson, and De Wet (2000), Nigeria has one of the highest
rates of investment returns in the emerging markets, presently estimated to be 30 percent.
Similarly, Ihugba, Odii, and Njoku (2014) view Nigeria as an investment hub pointing to its
huge population and abundant mineral and oil resources, including extensive arable land.
However, it is instructive to note, as pointed out in Ayanwale (2007) citing Asiedu (2003),
that the level of FDI attracted by Nigeria is mediocre compared with the resource base and
potential need.
Imoudu (2012: 122) provides a glance through the FDI profile of Nigeria, noting that it is one
of the economies with great demand for goods and services and has attracted some FDI over
the years. A detailed analysis along this line of thought by Imoudu shows that the amount of
FDI inflow into Nigeria was estimated at US$2.23 billion in 2003 and rose to US$5.31 billion
in 2004 or an increase of 138 percent. The figure rose again to US $9.92 billion or 87 percent
increase in 2005 (ibid). The figure, however, slightly declined to US$ 9.44 in 2006
(Locomonitor.com, cited in Imoudu, 2012: 122).

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2.2 Oil as the Cornerstone of Nigeria’s Economy
As Ross (2003: 2) has pointed out, it would be difficult to exaggerate the role of oil in the
Nigerian economy. A study by Sala-i-Martin & Subramanian (2003) shows that over a 35-
year period, 1965 to 2000, Nigeria’s cumulative revenues from oil (after deducting the
payments to the foreign oil companies) have amounted to about US$350 billion at 1995
prices. A similar study by Mohammad-Lawal and Atte (2006: 1) reports that Nigeria has
earned about $300 billion from oil exports between the mid-1970s and 2000. Overall, Ross
submits that since the first oil price shock in 1974, oil has annually produced over 90 percent
of Nigeria’s export income. In 2000 Nigeria received 99.6 percent of its export income from
oil, making it the world’s most oil-dependent country (Ross, 2003; also Table 3). The
dependence of the Nigeria economy on oil export is further emphasized in Table 4, which
shows that Nigeria is the third most oil- dependent country among crude exporters with crude
export accounting for 48.7% of total GDP. In this sense, Nigeria occupies the unenviable
position of the most oil-dependent country in terms of oil earnings as a percentage of total
export earnings. This trend is not likely to change in the short run at least, given the large
crude and natural gas reserves of Nigeria.

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Table 4: Twenty Most Oil Dependent Countries, 2000 (Fuel Exports as a Percentage of
GDP)
Source: Ross (2003)

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Table 5: Twenty Most Oil-Dependent Countries, 2000 (Fuel Exports as a Percentage of
GDP)
Source: Ross (2003)
According to EIA (2003), estimates of Nigeria’s proven oil reserves range from 24 billion to
31.5 billion barrels. Ross (2003: 3) notes that at the current production rate of 2 million
barrels a day, these reserves alone would last between 32 and 43 years. In addition to the
large oil reserves, In view of this, Nigeria has an estimated 124 trillion cubic feet of proven
natural gas reserves, the ninth largest such reserve in the world (ibid). Ross posits that there is
every reason to think that over the next several decades, Nigeria’s dependence on petroleum
exports will remain exceptionally high; it may even grow. However, what happens if the
dynamic global oil fuel price witness slippages (Euromonitor, 2014). Consequently, the wider
population has not benefited from the oil wealth instead, the country has witnessed rises in
fuel prices in recent years, also, poverty continue to remain a growing issue (BBC News,

21
2002), with 61 percent of Nigerians living less than a dollar a day, compare to 52 percent in
2004 (Magnowski, 2014). This is due to embezzlement of funds by the highly corrupt
government (BBC, 2002).
While noting that the Nigerian government has annually received over half of its revenue
directly from the oil sector, Ross (2003: 2) observes that oil revenue is not only large but it is
also highly volatile. The volatility of oil revenues creates a problem, since such revenues can
fluctuate drastically in size from year to year, causing the size of government, and the
funding of government programs, to fluctuate accordingly (ibid). Quoting figures made
available in World Bank (2002), Ross notes that from 1972 to 1975, government spending
rose from 8.4 percent to 22.6 percent of GDP; by 1978, it dropped back to 14.2 percent of the
economy.
2.3 Agriculture and the Nigerian Economy: Unlocking the Potentials
This section of the study looks at both investment constraints and opportunities in the
agricultural sector of the Nigerian economy through a review of extant literature.
That agriculture provides food for the human consumption and raw materials for industrial
needs underscores its importance, which is further highlighted by its foreign exchange
earnings and employment generation potentials. Perhaps it is recognition of the important
place of agriculture to national life that the Nigerian government had over the past three
decades, according to Oni (2013: 37), initiated a plethora of policies and programs which
were aimed at restoring agricultural sector to its pride of place in the economy.
Tombofa (2004) posits that agriculture laid the basis for and sustained the first industrial
revolution that took place in England (Olajide, Akinlabi and Tijani, 2012: 107). Consistent
with this line of thought, in some quarters, agriculture has been viewed as the bedrock of
development and economic self-sustenance (see Todaro and Smith, 2003 in Olajide et al).
Prior to the oil boom of the 1970s, agriculture was identified as the engine of growth in
Nigeria, accounting for about 66% of GDP in 1958/59 (Kwanashie, Ajilima, and Garba,
1998: 4).

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Agriculture continues to remain an important sector of the Nigerian economy despite the
neglect endured by the sector with the oil boom of the 1970s. As an indication of this
importance, the sector is estimated to contribute 34.4 percent variation in gross domestic
product (GDP) between 1970 and 2010 to the Nigerian economy (see Olajide et al, 2012;
Mohammad-Lawal and Atte, 2006). Accordingly, Oji-Okoro (2011) insists on the resilience
of agriculture as an important sector of the Nigerian economy by pointing out that it provides
employment opportunities for the teeming population, eradicates poverty and contributes to
the growth of the economy (see also Ahmed, 1993 as cited in Olajide et al, 2012: 104).
Consistently, Olajide et al cites Ogen (2007) who avers that the agricultural sector has a
multiplier effect on any nation’s socio-economic and industrial fabric because of the
multifunctional nature of agriculture.
For Okolo (2004), the agricultural sector is the most important sector of the Nigeria economy
and it holds a lot of potentials for the future economic development of the nation as it had
done in the past. Emeka (2007) therefore notes that the contribution of agriculture to
Nigeria’s GDP has remained stable at between 30% and 42%. This is in addition to
employing 65% of the labour force in Nigeria (ibid). While also acknowledging the decline
of agriculture in the 1970s, Kwanashie et al (1998: 1) maintain that it remains the mainstay of
the Nigerian economy. The reason for this position is not farfetched as they submit that
greater proportions of the Nigerian population depend on the agricultural sector for their
livelihood and the rural economy is still basically agricultural (ibid: 1). For instance, they
note that farmers make up 60% of employed Nigerians.
For Oji-Okoro (2011), agriculture is the largest sector in the Nigerian economy with its
dominant share of the GDP, employment of more than 70% of the active labor force and the
generation of about 88% of non-oil foreign exchange earnings. Olajide et al buttressed this
assertion by noting that agriculture’s share of the GDP increased from an annual average of
38% during 1992 to 1996 to 40% during 1977-2001 compared to that of crude oil which
declined from an annual average of 13% in 1992-1996 to 12% during 1997-2001.
However, against the economic potential it holds, Olajide et al (2012: 105) note that there has
been a gradual decline in the contributions of agriculture to the Nigerian economy.
Specifically in the 1960s, agriculture accounted for 65-70% of total exports; it fell drastically
down to around 40% in the 1970s, and later gone down to less than 2% in the late 1990s
(ibid). This decline in the fortune of agriculture has been largely attributed to rise in crude oil

23
revenue in the early 1970s. That less than 50% of cultivable land in Nigeria is under
cultivation further speaks volume to this decline (see Olajide et al). This decline
notwithstanding, an extensive review of literature by Olajide et al (2012: 108) shows a strong
correlation that has been established between Nigerian’s total GDP and the agriculture. They
therefore submit that the prospects of the non-oil sub-sector and the overall economy are
closely tied to the performance of the agricultural sector (ibid).
It is instructive to note that when set against policies aimed at promoting agriculture in the
country, no appreciable dividend has been yielded to justify the huge policy investment. In
this casting, Oni (2013) points out that enormous investment and export diversification
potentials for generating higher growth in the economy have remained unlocked and
unexploited in the agriculture due to a host of constraining factors that must be removed.
Commenting on both opportunities and challenges in the Nigerian agriculture sector, Eric
Stambler remarks that while opportunities for Nigerian agriculture are vast, the components
are complex. Some of the challenges identified include financing, underdeveloped input and
output markets, varieties and crop management, and etc.
Oni (2013: 38) identifies the peasant nature of agricultural production as a major challenge in
the agricultural sector of the Nigerian economy. In this sense, Oni observed that some of the
challenges associated with peasantry in Nigeria include low productivity and poor response to
technology-driven strategies. There is also the problem of poor returns on investment (see
Oni, 2013). Oni (2013: 39-41) identifies seven broad challenges confronting agriculture in
Nigeria. These challenges include marketing problems, storage and processing, infrastructure,
price instability for agricultural input and output, labor shortage, technical constraints, and
policy inadequacies and failure (see Oni, 2013; Phillip, Nkonya, Pender, & Oni, 2009).
2.4 Investment potentials of agriculture in Nigeria
The new policy on agriculture in Nigeria, according to Oni (2013), identifies seven areas of
investment opportunities in the agriculture sector of the economy. Identified investment
opportunity areas include agricultural production, which is made up of crop and livestock
farming, in addition to fishery and agroforestry (see Oni, 2013: 41). Similarly, Oni (2013)
identifies other investment opportunity areas to include provision of enterprise specific
infrastructure, agricultural produce storage, processing and marketing, agricultural input
supply and distribution, support for agricultural research. There is also investment

24
opportunities in the provision of agricultural implements hiring service and collaboration
with state and local government as well as farmers in implementation of the research-
extension-farmer-input/marketing-linkage system (REFILS) in the states (Oni, 2013: 41).
Other researchers that have identified investment opportunities in the Nigerian agriculture
sector include Manyong et al (2003), who noted thirteen prospective areas that include
commodity processing, agricultural commodity marketing, agro-industry/manufacturing,
agricultural commodity export and agricultural support services, amongst other investment
opportunities (see in Oni, 2013).
While it is clear from the forgone that agriculture in Nigeria is an investment opportunity
sector with huge potentials to attract FDI, Oni (2013: 41) deduced from Manyong el at (2003)
that the general perception among stakeholders is that foreign investors would be attracted to
activities/enterprises that are capital intensive and that add value to primary products.
Accordingly, Oni notes that the capital intensive nature if downstream agricultural activities
makes this sector more attractive to foreign investors and less attractive to local investors. On
a general scale, Oni (2013) identifies three reasons for the attractiveness of the agriculture
sector of the Nigerian economy to both local and foreign investors. Attractiveness of the
sector includes high level of demand, availability of raw materials/inputs and high rate of
returns (see Oni, 2013: 41). A region-specific analysis of investment opportunities and
attractiveness of the agriculture sector in Nigeria shows that different reasons drive
investment opportunities in different regions of Nigeria (see Oni, 2013). For instance, lack of
competing local investors is identified as a major factor that makes commodity processing
attractive to foreign investors in the North-East of Nigeria. Generally, while high capital
requirement is a disincentive for domestic investors in specific areas of the agriculture sector,
it is a huge incentive for foreign investors.
It is now a commonplace knowledge that the agricultural potential of Nigeria is barely being
tapped (see FAO, 2012: 16). This in FAO’s view is largely responsible for the inability of the
country to meet increasing demands for agricultural produce. Accordingly, FAO identifies
priority areas in need of investment to enhance agricultural production in Nigeria. Areas of
priority identified by FAO include the following:
 All facets of direct agricultural production, but specifically, fish production and
forestry, rehabilitation of groundnut, cocoa and oil-palm production and cotton;
 Investment in processing of agricultural produce and storage facilities;

25
 Investment in processing of agricultural input supply and distribution;
 Agricultural mechanization, e.g. adoption and use of farm equipment (such as
bulldozers, tractors), including the provision of land clearing and land preparation
services;
 Agricultural support activities, including research and funding of research activities;
 Water resources development, especially for irrigation and flood control
infrastructures along river basins;
 Development of earth dams and construction of wash bores and tube wells;
 Development and fabrication of appropriate small-scale and mechanized technologies
for both on-farm processing (e.g. threshing) and secondary processing of agricultural
produce for consumption or storage (see FAO, 2012: 16).
2.5 FDI and Economic Growth
The believe among policymakers, according to Imoudu (2012: 122) is that FDI produces
positive effects on host economies, and some of these benefits are in the form of externalities
and the adoption of foreign technology (Alfaro et al, 2006, cited in Imoudu, 2012: 122).
Accordingly, most countries strive to attract foreign direct investment (FDI) because of its
acknowledged advantages as a tool of economic development (ibid). Imoudu, taking a clue
from Ayanwale (2007), posits that FDI is assumed to benefit a poor country like Nigeria, not
only by supplementary domestic investment, but also in terms of employment creation,
transfer of technology, increased domestic competition and other positive externalities. This
view is also supported by Onakoya (2012: 66), who submits that international investment also
provides opportunities for the global transfer of technology and human capacity development
in addition to the promotion of competition in the domestic input market.
As noted in Onakoya, economists are inclined to support the free flow of capital across
national borders because it allows capital to seek out the highest rate of return since,
according to Samuelson’s (1948) capital arbitrage theory, international ventures seek higher
profit. Ajayi (2006b: 12) highlights the core motive behind quest by developing countries to
attract FDI gleaning from Gorg and Greenaway (2004: 189), who note that FDI is seen as a
key driver of economic growth and development. It is therefore not surprising that most
governments, of developing economies in particular, consider attracting FDI as priority.
Ajayi (2006b) note that attracting FDI occupies a top priority in the governmental policies of
most governments not just because it boosts capital formation but also because it can enhance
the quality of the capital stock.
Feldstein (2000), as cited in Onakoya (2012: 66), identified the provision of diversification
opportunities in other climes through the international flow of capital to reduce the risk faced

26
by owners of capital in their home countries, as one of the advantages of FDI. Ajayi (2006b)
points to how FDI helps to stimulate domestic investment, while Carbolic and Levine (2002)
emphasize the externalities, in the form of technology transfer and spillovers, produced by
FDI. The FDI-economic growth nexus is well captured in Cole and Elliot (2005: 531-2) who
note that at a general level, FDI has potential benefits to both host and donor countries. They
further maintain that the host countries may receive, for example, financial resources, new
technology and management skills, employment and a skill-upgraded work force. In addition,
they note that the donor country on the other hand receives benefits over and above those
associated with factor costs. This is because FDI looks for a combination of cheap labor (with
qualifications), reliable infrastructures, technological capabilities, local demand within an
efficient market system and the stability of a range of political, institutional and legal
environments (Van den Bulcke and Zhang, 1998, cited in Cole and Elliot, 2005: 531-2).
A major submission in Cole and Elliot however is that there is both a positive and negative
side to the FDI-growth nexus. On the positive side, they note that the standard approach to
FDI inflows to developing countries is based on endogenous growth theory where FDI
increases the capital stock and technological know-how, which in turn raises income and
labor productivity in the host country, which eventually results in higher GDP and tax
revenues (Cole and Elliot, 2005: 532). This positive relationship nevertheless, FDI could also
produce negative externality if there are substantial remittances of profits and dividends, or
the MNC has obtained significant tax or other concessions from the host government that
crowds out domestic investment (Cole and Elliot, 2005; see also De Mello, 1997; Ramirez,
2000).
Gleaning from Ayanwale (2007), Adams (2009: 178) has attributed the global increase in
FDI inflow to a general perception among countries in the global south whereby FDI is seen
as an important element in their strategy for economic development. This perception
nevertheless, Adam notes that empirical results do not give conclusive evidence of the impact
of FDI on the economy of developing countries. Rather what obtains in the FDI-growth
nexus debate, as indicated in Adam, is a cluster of theoretical positions for (see also
Ndikumana and Verick, 2008; Sylwester, 2005; Lumbila, 2005) and against (see Dutt, 1997;
Fry, 1993; Hermes and Lensink, 2003).
In addition to those who have made a case for or against the FDI-growth nexus, some set of
middle-ground theorists argued that the impact of FDI on economic growth depends on

27
whether the country has minimal level of absorptive capacity that allows it to exploit FDI
spillovers (Borenztein et al., 1998; Carkovic and Levine, 2002; Trevino and Upadhyava,
2003; Le Vu and Suruga, 2005; Lumbila, 2005). Conversely, Adam (2009: 178) identifies
such absorptive capacity to include educated workforce, institutional infrastructure and
liberalized markets.
Similarly, Onakoya (2012: 67) notes that there have been several studies on the relationship
between FDI and economic growth with conflicting findings. Türkcan, Duman, and Yetkiner
(2008) have found that FDI and growth are important determinants of each other, and that
export growth rate is a statistically significant determinant of both variables (cited in
Onakoya, 2012: 67). Adopting an approach that treats economic growth and FDI as
endogenous variables and estimates a two-equation simultaneous equation system with the
generalized methods of moments (GMM), Türkcan, Duman, and Yetkiner (2008) test the
endogenous relationship between FDI and economic growth using a panel dataset for 23
OECD countries for the period 1975-2004 (as cited in Onakoya, 2012: 67). Their results,
according to Onakoya (2012: 67), indicate that there is an endogenous relationship between
FDI and economic growth.
Adopting a causality examination approach that is based on the Toda-Yamamoto test for
causality, Karimi and Zulkornain (2009) found no strong evidence of bi-directional causality
between FDI and economic growth. Rather, they found a long run relationship suggesting
that FDI has indirect effect on Malaysia's economic growth (see in Onakoya, 2012, 67). A
review of literature by Onakoya (2012: 67) notes that Chakraborty and Nunnenkamp (2008)
investigate the FDI-growth nexus in post-reform India by subjecting industry-specific FDI
and output data to Granger causality tests within a panel co-integration framework. The result
of their investigation indicates that growth effects of FDI vary extensively across sectors
(ibid).
Onakoya (2012: 66) argues that despite the contributions of FDI in the form of corporate tax
revenue that accrues to the host country, a major drawback to the growth-enhancing
imperative of FDI remains that the highly capital intensive technology engendered can
exacerbate the unemployment situations in labor surplus host countries. This is aside that the
creation of monopolies in areas where the entry barriers have been raised in some cases, may
crowd out domestic operators (ibid).

28
2.6 FDI and the Nigerian Economy
Gleaning from Ayanwale (2007), Adams (2009: 178) has attributed the global increase in
FDI inflow to a general perception among countries in the global south whereby FDI is seen
as an important element in their strategy for economic development. This perception
nevertheless, Adam notes that empirical results do not give conclusive evidence of the impact
of FDI on the economy of developing countries. Rather what obtains in the FDI-growth
nexus debate, as indicated in Adam, is a cluster of theoretical positions for (see Ndikumana
and Verick, 2008; Sylwester, 2005; Lumbila, 2005) and against (see Dutt, 1997; Fry, 1993;
Hermes and Lensink, 2003). In addition to those who have made a case for or against the
FDI-growth nexus, there is also a set of middle-ground theorists who posit that the effect of
FDI on economic growth, depends on whether the country has minimal level of absorptive
capacity that allows it to exploit FDI spillovers (Borenztein et al., 1998; Carkovic and
Levine, 2002; Trevino and Upadhyava, 2003; Le Vu and Suruga, 2005; Lumbila, 2005).
Adam (2009: 178) identifies such absorptive capacity to include educated workforce,
institutional infrastructure and liberalized markets.
Nevertheless, many analysts and experts have suggested the use of Foreign Direct Investment
(FDI) as a veritable injection to kick-start the Nigerian economy (Onakoya, 2012: 66). This
is because FDI is not only the transfer of ownership from domestic to foreign investors, but
also a tool for better corporate governance and attendant clearness in business practice (ibid).
On the one side of the FDI-economic growth nexus, some authors have called on
governments to encourage the inflow of FDI to enhance economic growth (see Oseghale and
Amonkhienan, 1987). These authors are of the opinion that FDI is positively associated with
economic growth in Nigeria (see Oyatoye, Arogundade, Adebisi, and Oluwakayode, 2011).
On the micro economic level, the review of Ayanwale and Bamire (2001) at the firm level
show that productivity positive spill-over of foreign firms on domestic firm's productivity
(Onakoya, 2012: 68). Emphasizing the importance of FDI to the Nigerian economy Wafure
and Nurudeen (2010) identify job creation and technology transfer as some of the benefits
that come with FDI inflow. They applied the error correction technique to analyze the
relationship between foreign direct investment and its determinants. Wafure and Nurudeen
(2010: 26) show in their analysis that the market size of the host country, deregulation,
political instability, and exchange rate depreciation are the main determinants of foreign
direct investment in Nigeria.

29
On the impact of FDI on the Nigerian economy, a study by Ariyo (1998) shows that only
private domestic investment consistently contributed to raising the GDP growth rates during
the 35 years period covered by the study, with FDI playing an insignificant role. Studies
employing different models have noted negative relationship between FDI boom and
economic growth (see Oyinlola, 1995; Adelegan, 2000; Akinlo, 2003; Bello 2010). For
instance, Bello and Adeniyi utilized the Autoregressive Distributed Lag (ARDL) approach to
show that there was no existence of a long run relationship between FDI and growth on the
one hand while there exists a long run causal link between environmental quality and FDI
inflows on the other hand (cited in Onakoya, 2012).
Imoudu (2012) analytically examine the FDI-growth nexus in Nigeria in the period 1980-
2009 using Johansen cointegration technique and vector error correction methodology in
which FDI is disaggregated into various components. The result obtained shows that the
impact of the disaggregated FDI on real growth in Nigeria namely: agriculture, mining,
manufacturing and petroleum sectors is very little with the exception of the telecom sector
which has a good and promising future, especially in the long run (ibid: 122). Besides
recommending the liberalization of the foreign sector of the Nigerian economy through the
reduction of tariff barriers, Imoudu also notes the importance of stable and enabling
environment for FDI inflow. Specifically, Imoudu strongly proposes the creation of enabling
investment climate in Nigeria through the overhauling of the security system which will help
in no small measure in boosting investors’ confidence as instability scare way prospective
investors. The crux of Imoudu’s study is that while FDI may not necessarily creates growths
in every sector of the economy, enabling and stable environment is important for attracting
FDI to an economy.
In view of cases for and against the relationship between FDI and economic growth that
saturates the FDI literature and particularly in the Nigerian context, Onakoya (2012: 68),
positing that the findings on the FDI–growth nexus is far from being conclusive, calls for
country-specific studies.
2.7 Investment Constraints in Nigeria and Determinants of FDI Inflow
Onakoya (2012: 66) observes that Nigeria is believed to be a high-risk market for investment
although blessed with enormous mineral and human resources. Gleaning from Auty (1993) in
this context, the Onakoya further notes that co-existence of vast wealth in natural resources

30
and extreme personal poverty referred to as the “resource curse” or 'Dutch disease' appears to
bedevil the country. To underscore the high prevalence of poverty in Nigeria, a World Bank
(2011) estimate ranks 170 out of 213 countries with respect to the Gross National Income Per
Capita which is quoted at US$1,200.
Amongst constraints to investment, poor corporate governance, unstable political and
economic policies, weak infrastructure, unwelcoming regulatory environments and global
competition for FDI flows have been identified as impediments standing in the way of
attracting significant FDI flows in Dupasquier and Osakwe (2006). Jerome and Ogunkola
(2004) have been noted, in a review by Onakoya (2012: 67), to ascribe low level of FDI in
Nigeria to deficiency in the country's legal framework concerning corporate law, bankruptcy
and labour law, in addition to institutional uncertainty.
Ayanwale (2007), who focused on the link between non-extractive FDI and economic growth
in Nigeria, submits that the determinants of FDI in Nigeria are market size, infrastructure
development and stable macroeconomic policy. Ekpo (1995) on the other hand explains the
variability of FDI into Nigeria by the political regime, real income per capita, rate of
inflation, world interest rate, credit rating and debt service. For Anyanwu (2011), major
determinants of FDI inflow include change in domestic investment, change in domestic
output or market size, indigenization policy and change in openness of the economy.
Concerning FDI-growth nexus, the review finds that the relationship could be negative and
positive, since the impact of FDI inflow on the economy depends on a number of factors, in
particular the domestic capacity of the host country to take advantage of benefits that come
with FDI inflow. In effect, enabling business environment is critical to attracting FDI and to
taking advantage of whatever benefits accrue from FDI inflow.
On FDI and the Nigerian economy, no conclusion can be drawn from both theoretical and
empirical literature. Rather what is clear is that a bigger chunk of FDI to Nigeria has gone to
the blue chip oil sector, while the agriculture sector has lagged behind. Lastly, the review of
literature identifies various investment constraints in Nigeria while also indicating that it is a
genuine investment hub with huge potential to attract FDI. The huge natural resources base of
Nigeria and its large human population have been singled out as two important determinants
of FDI to the country.

31
CHAPTER THREE
METHODOLOGY
This chapter details the methods for gathering data for the study and the approach adopted for
analyzing and reporting field findings. The objective of the chapter is to devise a
methodology that is both appropriate and adequate not only for investigating the specific
research questions, but one that brings a clear answer to the core research question.
3.1 Data Collection Method and Analysis
This study will be based on both secondary and primary sources of data. Secondary data will
come from varied sources, which include but not limited to extant literature obtained from
referred academic journals and scholarly books; internet articles; articles from newspapers
and magazines, and etc. Primary data will be collected using the interviewing method and
review of documents from relevant sources. Based on open-ended questions, interviews will
be semi-structured in nature. Interview participants will be purposively selected to meet the
objectives of the study. In this case, participants will be practitioners in the sector under
study. Specific attention will be paid to managers of small and medium scale farms in
Nigeria, academics and researchers, and government agriculture officials selected from
relevant ministries and agencies. Two survey instruments are used for the interviews. Phone
interviews were conducted for two participants using a semi-structured open-ended interview
survey instrument. Personal interviews were conducted with the other three participants.
Accessibility is the main factor in the choice of survey instrument administered on the
different participants.
As noted in Laforest (2009: 1), semi-structured interviews are useful for gathering qualitative
information. They are suited to working with small samples and are useful for studying
specific situations or for supplementing and validating information derived from other
sources used for making safety diagnoses (Laforest, 2009). Respondents are purposively
selected based on their understanding of the problem and issues under consideration, given
the privileged positions they occupy in management structure of the selected cases (Laforest,
2009: 2).
The face to face interview with other 3 respondents was conducted successfully as the
researcher was able to control the setting in which the interview took place (Phellas et al,

32
2011: 183), the interview took place in appropriate settings and questions were asked in a
correct order but the cost and logistics associated with the face to face interview led to the
interviewer proposing phone interview with other two respondents (Phellas et al, 2011: 183).
For example, participants are scattered across the geopolitical zones in Nigeri (See
limitations, p.41). However, the respondents benefited from some of the advantages Phellas
et al (2011) pointed out in their work; for example, the researcher’s presence gave
opportunity to ask complex questions from the participants, and these questions are well
explicated (Phellas et al, 2011: 183). Conversely, the interviewee faced challenges such as
keeping phone interview brief; also the author had to avoid asking sensitive questions so as
not to provoke uncharacteristic responses (Phellas et al, 2011: 183). Nonetheless, the
researcher ensures all questions asked via phone interview are professionally and completely
standardized in a well-organized format before the conversation so as to remove every
partiality from the process.
This study deals with ethical issues that may arise during the conduct of research by seeking
and obtaining consent and permission from appropriate authorities both in gaining access to
field sites and participants and in reporting field finds. In effect, confidentiality is a hallmark
of the study.
Interviews are conducted using an interview plan (see appendix) and responses are recorded
with the aid of audio devices and field notes after due consent from participants. New
questions and meanings are allowed to emerge through the interview process, given the open-
endedness of questions posed to respondents. Data that emerged from interviews are
subsequently transcribed into themes to identify the principal problems raised by respondents
(Laforest, 2009: 5), the emerged themes are then reported as field finds after detailed
description of interview contexts.

33
CHAPTER FOUR
ANALYSIS
4.1 Designation of Participants
This chapter analyzes the results obtained from field research in a thematic form, with each
section of the chapter dealing with specific and distinct issue. The analyzed data is gathered
through interviews conducted with five participants representing different stakeholders in the
agriculture sector of the Nigerian economy. Among those interviewed are government
officials, farm managers; farmers; and researchers in the field of agriculture economics.
However, due to logistics, the researcher proposed a phone interview with 2 of the
participants while face to face interview was organized with other 3 participants. What
follows below is a representation of the different section of stakeholders in the agriculture
industry interviewed for the study.
R1 (Agriculture extension officer)
R2 (agricultural economics researcher)
R3 (Researcher and medium-holder cassava farmer)
R4 (Large-scale poultry farm manager)
R5 (State Agricultural officer)

34
Table 6: Respondents’ Details

35
It is interesting to note that participants interviewed for the study have looked beyond
production to other aspects of the agribusiness. In this sense, participants point to the huge
potential for investment in the area of agricultural produce processing (Participants R1&3,
Interview 2014). Although this sub-section of agriculture holds the biggest investment
potential, it is in the view of participant R3 largely untapped. For participant R1 therefore,
investors should not limit their activities to production alone. Rather, they are advised to
move from production to processing of agricultural produce (Participant R1&5, Interview
2014).
Besides processing of agricultural produce, respondents also identify farm input production
like animal and fish feeds and fertilizer as other potential investment areas that are tied to
agriculture in Nigeria (Participant R3, Interview 2014). According to participant R1, for a long
time there has been no what could be termed a large-scale rice-processing farm in Nigeria.
This is against the fact that rice is been produced across the country. Consistently, participant
R1 identifies provision of farm equipment like tractors as a potential investment area in the
agriculture sector in Nigeria. Other investment opportunities identified include information

36
dissemination services, where prospective investors can invest in locating where the farms
are; what is produced there; what the produce can be used for; and who are those that need
the produce (Participant R1, Interview 2014). In addition, investors could also look to the area
of providing agricultural services like breeding of improved seedlings, according to
respondent (Participant R1, Interview 2014). Overall, the aforementioned participant advised
that anyone looking to invest in agriculture in Nigeria should look at the value chain and
target the processing and marketing aspect.
However, diverse constraints and challenges to investment in the agriculture sector were
identified by participants interviewed for this study. Some of the identified constraints
include poor infrastructure like dearth of good roads and stable electricity, which usually
result in huge volume of wastages (Interview, 2014). For example, a small community in
Akwa Ibom state in Nigeria recently protested against ten years of no electricity, according to
the village head (Chief Jimmy Umoren), “there has been no sign of electricity from either the
defunct Power Holding Company of Nigeria or the new Port Harcourt Electricity
Distribution, not even for a minute. Our hope of getting electricity is in comatose; there is no
government officials, both from the state and the local government council at Ukanafun have
come to our aid…” (Ekpimah, 2014 cited from Nigeria Punch).
According to participant R1, the poor state of infrastructure makes storing between fat and
lean season a serious challenge. Consistently therefore, participant R2 identifies lack of
policies and infrastructure to accommodate excess production as a major constraint to
investment in agriculture, noting that there are times when farmers have nowhere to push the
excess production to. This discourages continued investment in subsequent seasons
(Participant R2, Interview 2014). Minimizing waste in this sense is therefore a major
challenge to investment in agriculture in Nigeria. This is affecting farmers’ returns on
investment and it is a major disincentive to investment in agriculture in Nigeria (Participant
R2, Interview 2014). Hence, there is a need for the Nigeria government to confront and tackle
the issues that surrounds its ‘volatile business environment’ (Euromonitor, 2014).
4.2 Assessment of Investment Prospects of Agriculture in Nigeria by Participants
All the participants interviewed gave a positive assessment of agriculture as a potential
investment market in Nigeria. The following statements sum up their opinions:
R1– Against the huge potential the agricultural sector holds, respondent notes that
agriculture in Nigeria has not been optimal. For the respondent, the agriculture sector
in Nigeria is ripe for harvesting; irrespective of challenges, the opportunities are there.
As a result of this, the Nigerian government launched a programme called Agriculture
Transformation Agenda (ATA) in 2011 to aid boost agriculture production in Nigeria,
and attract foreign investors which has already attracted over 11 billion dollars’ worth
of investments as at 2013 (Business Day, 2014).

37
R2– To emphasize the potential of agriculture and its importance to the Nigerian economy,
respondent notes that if agriculture could sustain the nation before crude oil, we can
still survive on agriculture. “Agriculture is a main explored sector in the country”.
According to Akinfe (2009), Agriculture presents a more optimistic future to Nigerian
economy than oil as majority of Nigeria arable land remains uncultivated, thus
provides investment opportunities for botth the locals and MNEs (Euromonitor, 2013;
Akinfe, 2009).
R3– Agriculture is described by respondent as a raw sector that is largely untapped, in
terms of its potentials; “the sector has many potentials and it is an untapped sector”.
One of these potentials is ‘snail farming’. Purefoy & Macguire (2011) posit with their
investigation that snail farming might be the next “big thing” in Nigeria as some
countries from Europe exports snail from Nigeria and attracts local businesses like the
high luxury hotels and restaurants in Nigeria (CNN News, 2011)
R4– Agriculture should be taking more seriously as the mainstream of the economy; it can
also be used to tackle the issue of unemployment for youths which can have a
multiplying effect on the social and economy values in the country. Let’s not forget
agriculture supports poverty reduction by increasing the level of food production,
according to the World Bank, 48.5 percent of people Sub-Sahara Africa live in
poverty as a result of food shortages and malnutrition (Euromonitor, 2013).
R5– The agricultural sector should not be neglected because agriculture remains the
dominant occupation of a vast majority of Nigerians especially those living in the
rural areas. In fact, majority of the African population lives in the rural areas and most
the people in Nigeria and Kenya rural areas depends on fishing and hunting and
forestry, which contributes 32 and 28 percent of total GVA (gross value added) to the
two countries’ economy as at 2012 (Euromonitor, 2013).
4.3 Potential investment opportunity-areas
Different areas of investment opportunities in the agricultural sector of the Nigerian economy
were identified by respondents. Presented below is a case-by-case investment opportunity-
area in agriculture identified by the different respondents.
R1– Processing; information dissemination services; farm input and equipment provision;
and breeding services
R2– Oil palm, cocoa, cassava, are some of the crops with huge investment potential areas
identified by the respondent. According to a report presented by the FAO, Nigeria has
the largest cassava production in the world, which almost doubles the size of other
cassava producing countries like Brazil, Indonesia and amongst others (Taylor, 2004:
4). Sadly, cassava domestic market remains undeveloped in Nigeria; there is a need
for agro-industries development, government intervention, transfer of processing
technology and product development (Taylor, 2004 retrieved from FAO).

38
R3– Poultry; fishery; forestry; cassava cultivation; processing of produce; animal feeds and
fertilizer production. A Nigeria market research institute (Foramfera) reported milk
production in Nigeria have significantly dropped since 1994, despite the country’s
potentials (Foramfera, 2012).
R4– Poultry farming; arable farming; and meat processing, research indicates ‘70 percent
of Nigeria’s 923, 768 square km arable land mass is suitable for agricultural farming
but yet Nigeria still remains a major net importer of agricultural food products’
(Foramfera, 2012).
R5– Input production and supply; Commodity processing; Agro-industrial processing;
Agricultural commodity export; Industrial crop production
4.4 Investment Constraints in the Agriculture Sector in Nigeria
R1– Infrastructural challenges; awareness and information gap; funding problems
R2– Policy problems; infrastructural challenges; funding; storage problems
R3– Access to farmland; marketing problems; lack of expertise; corruption; on the issue of
corruption, majority of Nigerians lives in poverty while over 140 billion dollars is being
looted from the Nigeria oil sector (Mountain, 2012 cited from Sahara reporters)
R4– Policy problem; poor infrastructure; competition, according to a report carried out by
the Euromonitor,
R5– Unfavorable Government policies; dearth of basic infrastructural facilities; technical
constraints; land tenure system; illiteracy among farmers. As mentioned earlier, Nigerians
can benefit more from the agricultural sector only if the country makes available ‘enabling
government’ (Balogun, 2012) thus one can conclude that the agriculture sector requires an in-
depth government’s involvement.
4.5 Investment incentives in the agriculture sector
Despite the issues facing the Nigerian agriculture sector, the FAO (2012) reports indicates the
Nigerian Government has established a number of incentive packages to drive both local and
foreign investment in the agriculture sector. Efforts to stimulate investment in agriculture
explain why agricultural production and processing enjoys pioneer status eligibility as well as
the following incentives:
 Companies in the agro-allied business enjoy unrestricted capital allowance, granted at
100 percent.
 Payments of minimum tax by companies that make small or no profits do not apply to
agro-allied businesses.

39
 Agro-allied plants and equipment enjoy enhanced capital allowances of up to 50
percent.
 Processing of agricultural produce is a pioneer industry; consequently, it benefits from
a 100 percent tax-free period for 5 years.
 All agricultural and agro-industrial machines and equipment enjoy 1 percent duty.
 The Agricultural Credit Guarantee Scheme Fund (ACGSF), administered by the
Central Bank of Nigeria, guarantees up to 75 percent.
The Interest Drawback Program Fund provides a 60 percent repayment of interest paid by
those who borrow from banks under the ACGSF, and for the purpose of cassava production
and processing (see FAO, 21012: 12-4).
4.6 Policy Recommendation for Government and Investors
R1– bridging the communication gap between producers and buyers; bridging
communication gap in the value chain to reduce waste; and adequate feasibility study
R2– feasibility study; interest rate reduction; and extension of loan payback time
R3– Feasibility study (of the market, financial, and technical components); and
collaboration with research institutes
R4– creating special fund for farmers; public-private partnership
R5– Basic infrastructural development; provision of credit facilities; provision of market
and extension services
4.7 Realistic Survival Strategies of some Firms in the Agriculture Sector
R4– Private funding; partnership with government agencies; gradual expansion; financing
by suppliers

40
CHAPTER FIVE
DISCUSSION OF FINDINGS
The chapter aims to answer the specific research questions of the study through a critical
discussion of field findings as presented in the analyses in the preceding chapter. The chapter
is therefore divided into four question-based sections.
5.1 What and where are the Key Investment Opportunities in the Agriculture Sector
of the Nigerian Economy?
Poultry is identified as a potential area of investment in the livestock production of
agriculture in Nigeria (see section on analysis). According to participant R3, poultry has the
potential to take over from oil as a major investment attraction to the country but research
indicates the poultry industry lacks government-funding in Nigeria (Sahara reporter,
2009).This potential for the respondent is underlined by persistent annual shortage of egg
supply in Nigeria. Poultry in this sense has a potential for investment expansion, especially
when it is considered that only a small percentage of the country’s huge population still
consume egg on a regular basis– egg is still an elitist food commodity (Participant R3,
Interview 2014). In addition, the aforementioned participant identified fishery and forestry as
potential investment opportunity areas for those considering investing in agriculture in
Nigeria. The United Nation pointed to the significance of aquaculture on how they aid creates
job and the nation’s food security, also, the UN research indicates there will always be a
significant rise in food demand since the world population continues to increase (see UN
documents, n.d).
In crop farming, participant R3 points to crops like cocoa, oil palm and cassava as holding
promising potentials for investment in the agriculture sector in Nigeria. This observation is
consistent with the position of participant R2, who similarly identified oil palm, cocoa,
cassava, are some of the crops with huge investment potentials in Nigeria. Regrettably,
Nigeria remains the third largest palm oil producer in the world after Malaysia and Indonesia
but remains a net importer (Thompson, 2010 cited from IPPA; Thompson, 2010 cited from
New York Times). In fact, the Nigeria President, Goodluck Jonathan recently seek the
support of the Obama administration, calling for direct investment into the Nigerian non-oil
sector at a peace and security summit held in Washington DC (Shadare & Emmanuel, 2014).
He (Goodluck Jonathan) disclosed that despite the huge amount of inward FDI into the
country, and the $36 billion volume of trade between the US and Nigeria, the country still has
“large areas of unexploited fertile lands for agriculture” (Shadare & Emmanuel, 2014;
Adetayo, 2014 cited from the Punch).

41
5.2 What are the Challenges to Investment in the Agriculture Sector in
Nigeria?
High prevalence of illiteracy among farmers is also identified as a major investment
constraint in the agriculture sector in Nigeria (Participant R5, Interview 2014). In comparison
to South Africa’s overall literacy rate which indicates 99 percent of both male and female
over 15 years can read and write while Nigeria lags behind with just 61.3 percent overall
literacy rate (Centre Intelligence Agency fact book, 2014). Thus, the government must ensure
they transform not only the country but also the agriculture sector by investing and providing
adequate educational support programmes for farmers.
As part of the array of investment constraints in the agriculture sector in Nigeria, participants
have noted that challenge of raising the needed startup capital for investment (Interview,
2014). According to one participant, banks prefer to issue out loans to support investment in
other sectors considered less risky and more lucrative than to agriculture, even against the
directives of the Central Bank of Nigeria (Participant R1, Interview 2014). Another
participant also highlights the challenge of meeting the huge capital investment required by
agriculture, observing that “no bank will be willing to give loan and wait for the time it will
take for what you used as the loan for to mature” (Participant R2, Interview 2014). In this
sense, assessing credit facilities is a major challenge to agriculture in Nigeria (see Participant
R4&5, Interview 2014). Contrary to participant R2, the federal government and Central Bank
of Nigeria has continued to formulate and introduce programmes such as CACS to aid fast
track agriculture development in the sector (see Bakare et al, 2013; CBN webpage, 2006-
2011). For example, the CBN collaborated with the federal ministry of agriculture and
launched A Commercial Agriculture Credit Scheme programme in 2009, aid to provide funds
for banks to help fast track agricultural development in the country by providing farmers with
credit facilities sector (see CBN webpage, 2006-2011). In relation to participant R2 argument,
one could agree with him in the sense that, most of these facilities are out of reach due to
gross shortage, Nigeria’s huge population or even high rate of Nepotism in the country thus
government credit facilities might be available to support farmers in the agriculture sector but
the demand exceeds supply.
For participant R3, some of the challenges confronting agriculture in Nigeria includes lack of
expertise; farmland accessibility; and of course corruption. On the expertise problem, the
participant notes that many people in Nigeria see agriculture as a traditional enterprise which
they do not need to acquire special trainings for. This lack of expertise largely accounts for
some of the business failure experienced by local farmers (Participant R3, Interview 2014).
Similarly, there is the challenge of how to translate expertise acquired through trainings into
practical experience, just as the participant has learned from experience as a new entrant into
agribusiness.
According to participant R3, it was difficult translating theoretical knowledge into practical
experience on farm. Associated with the challenge of farmland accessibility is the cost of
acquiring and preparing the land for cultivation, and the issue of potential conflict over land

42
between pastoralists and peasants (Participant R3, Interview 2014). Then there is corruption,
which manifests in the form of bribery or the settle syndrome. According to the participant,
you have to bribe landowners and even government officials to acquire and prepare land for
production. Corruption in this sense is a variable you must consider when doing business in
Nigeria– “you must see them” (Participant R3, Interview 2014). An investigation presented
by the World Bank points out 80 per cent of Nigerian firms’ bribes government bureaucrats
(see Anaro et al, 2012).
Perhaps more importantly, a participant points to the non-existence of policies to protect
farmers in the sense of mopping up excess production (Participant R1, Interview 2014).
Generally, this participant notes that there are no policies to ensure farmers get the rewards
for their investment. According to this participant, there is a general lack of adequate
incentives from government to encourage investment in the agriculture sector. And there is
also the challenge of how to create awareness for demands for some products.
5.3 What Realistic Strategies are available for overcoming the numerous
Investment Constraints in the Agriculture Sector?
One of the solutions to the numerous challenges to investment in the agriculture in Nigeria
proffered by the participants interviewed for the study includes bridging the communication
gap between producers and buyers of agricultural produce (Participant R1, Interview 2014).
This is in addition to bridging communication gap in the value chain to reduce waste
(Participant R2, Interview 2014). Government intervention in land allocation and acquisition
also suggested by a participant as one realistic way of overcoming some of the investment
challenges in agribusiness (Participant R3, Interview 2014); According to White (2009: 213),
government intervention would be a critical success factor to today’s modern economic
development in any industry. The participant went further and backup the government
intervention in land suggestion referring to the case of Osun state where government provides
land incentives to prospective investors in agriculture through direct allocation of farmlands.
Some other policy recommendations by participants include reduction of interest rates on
loan and extension of loan payback date (Participant R2, Interview 2014). Participant R4
recommends public-private partnership as an investment strategy in the agriculture sector,
while participant R3 calls for collaboration between prospective investors and research
institutes that are domiciled in the country. This form of collaboration will provide access to
technical supports and expert guides that investors may not have hands on.
All participants interviewed agreed that adequate feasibility be conducted by prospective
investors into agriculture in Nigeria (Interview, 2014). In this sense, the market, financial,
and technical components must be taken into consideration in any feasibility study
(Participant R3, Interview 2014). As an advice to investors, a participant opines: “look before
you leap; take an informed decision, draw out a carefully crafted business feasibility study”
(Participant R1, Interview 2014).

43
CHAPTER SIX
CONCLUSION
Presented in this chapter is a summary of how the objectives set at the beginning for the study
have been met through the various answers that have been provided to the specific research
questions. Through this summary, conclusions are drawn and recommendations are provide
to guide both public policies and business decisions on investment in agribusiness in Nigeria.
One general conclusion that may be drawn from this study is that Nigeria undoubtedly
possesses huge potentials to attract both local and foreign investment in the agriculture sector
of its economy.
6.1 Conclusion
This study has shown that Nigeria is an important investment hub in Africa with huge and
untapped potentials for both local and foreign investment in the agriculture sector, as an
alternative to the oil sector that has enjoyed much attention. As a country where agriculture
plays important role like providing employment for up to 70% of the population, the place of
agriculture in the Nigerian economy cannot be overemphasized. The much importance
attached to agriculture has been revealed both in the review of literature and the field research
carried out for this study. While there are numerous constraints and investment challenges in
agriculture in Nigeria, this study has shown that not only are these challenges not
insurmountable, but there are also diverse opportunities and incentives to invest in the
agriculture sector in Nigeria. The huge population and extensive arable land the country
boasts of, coupled with new government attention, make agriculture a big business in Nigeria.
Opportunities for investment in the agriculture sector are also diverse, depending on where
one is looking. Investment opportunities in agribusiness in Nigeria may range from
traditional production to processing. There are also opportunities to provide farm inputs like
improved seed and animal breeds and even heavy equipment like tractors. Storage and
transportation services may also be provided by prospective investors. Some prospective
investors may also look to the provision of market information and technical and expert
services. Overall, as revealed in this study, the high capital intensive and technical nature
agriculture mean that no single individual firms can provide it all in the sector. Moreover, the
technical nature of agriculture and the huge capital investment requirement provides very
important openings for FDI flow through MNEs into the agriculture sector of the Nigerian
economy. The huge population guarantees market and labor for prospective MNEs. In
addition, the available extensive arable land and a generally clement weather complete the
locational advantage of Nigeria as agriculture investment market.
6.2 Limitations
Due to logistics, most of the participants are scattered across the geopolitical zones in
Nigeria, based on this, the author proposed a phone interview with two of the respondents
while the authors successfully engaged in face to face interview with other 3 participants.
Another limitation is the fact that Nigerians and its business environment can be atypical;

44
respondent might be biased when giving information or might not respond well to some of
the author’s questions via telephone interview and not want to share complete and relevant
data of their organizations with the author thus some part of the interviews might lack
validity as researcher might not be able to tell if respondents are being truthful on the phone.
However, the author ensured and it is his responsibility to make sure that respondents are not
affronted by questions asked.
6.3 Recommendation
This study provides two sets of recommendations that are based on the report of the field
research conducted for the study. One recommendation is for policy makers, while the other
recommendation is for prospective investors, MNEs in particular.
6.4 Policy recommendation to prospective MNEs
The study suggests the following policy advice to prospective MNEs seeking to invest in
agriculture in Nigeria
 International strategy for MNEs - Although, the Nigeria government encourages
manufacturers to sometimes meet local requirements. However, the Nigeria laws
treats both domestic and MNEs equally thus, MNEs are granted full ownership in the
market including the agriculture sector but the oil sector is excluded (Euromonitor,
2014). Hence, one could advise MNEs to adopt transnational strategy for its
international market development through a joint venture with a local partner in the
Nigeria agriculture sector. A joint venture would enable collaboration with agro-
research institutes domiciled in the country for expert and technical advice. This way,
foreign investors would benefit from low cost risk, political connection and consumer
insight from local partner while on the other hand, they (foreign investors) would
provide Nigeria local partners with financial strength, international experience,
operational knowledge and branding (Hanson et. al, 2008, Doole and Lowe, 2012).
Most importantly, multinationals should take note that joint ventures can sometimes
be problematic due to conflict of objectives between the two partners thus there can
be concerns over profit division and investment decision.
 As mentioned by all participants that there will be a need for adequate feasibility
study before integrating the market due to its dynamism and complexity. Gram (1986:
38) pointed out the importance of market research in that understanding your
consumer needs, wants, and the business environment all requires a feasibility study
especially for ‘new venture founder’.
 Investment in capital intensive and technically demanding areas like processing, input
provisioning, technical and expert services support, etc.
6.5 Policy recommendations for government
There is a need for government intervention in the Nigeria agriculture sector. According to
the research conducted by the United Nation, in most countries, government intervention has
always been the key to success of any industry, and that any loophole in this system would be

45
as a result of government’s negligence (United Nation document, n.d). Therefore, in order to
boost investment and attract FDI to the agriculture sector of the Nigerian economy,
recommended policies for government include the following:
 Promulgate and promote agribusiness-oriented policy
 Physical and social infrastructural development i.e. provision of basic infrastructural
facilities since issues like power and electricity supply shortage can be a barrier to
smooth business activities for the MNEs (Euromonitor, 2014).
 Strengthen anticorruption campaign and reduce insecurity through institutional
restructuring
 Agricultural technology development and natural resource management
 The government should plough back the oil wealth into the agriculture sector by
generating heavy investment in human capacity building in the agricultural sector
 Investment in marketing and storage facilities in the agriculture sector
 Provision of credit facilities to encourage prospective investors, both small and large-
scale
 Provision of inputs at affordable cost
 Provision of extension services
In summary, this study was able to meet its objectives, as the author was able to highlight
Nigeria as an investment opportunity market with huge potential to attract MNEs in the
agriculture sector of its economy. The study has succeeded in identifying both the investment
constraints and opportunities in the agriculture sector of the Nigerian economy. It is therefore
able to come up with informed recommendations to guide both policy and business decisions
on how to invest in agriculture in Nigeria.
Evidently, the economy needs diversification, perhaps, the Nigerian government needs to ask
themselves this question; what would happen when the 150 billion dollars’ worth of oil
barrels shipped out of the country yearly suddenly drop to 75 billion dollars (Mountains,
2012 cited from Sahara reporters), as a result of slippages in the dynamic global oil prices
(Euromonitor, 2014) or the shift to the era of electric cars, as electric cars and new vehicle
technologies is seen as a smart investment, and reduces energy spending; besides, a research
done by IEDC (International Economic Development Council) projected that there will be
1.5 billion electric cars on the road by 2050 (Todd, 2013 cited from IEDC). Consequently,
countries like Nigeria whose economy over dependent on oil will suffer. According to the
Nigeria minister of agriculture, Akinwumi Adesina;“Nigeria is known for nothing else than
oil, and it is so sad, because we never used to have oil – all we used to have was
agriculture...” (Green, 2013 cited from Forbes).

46
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